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In the 1949 Ealing comedy Passport to Pimlico, residents of the London borough set themselves up as a separate state with predictably comic results. When Pimlico’s governing committee lifts post-war rationing, shoppers flood to the new dominion only to find themselves trapped when its borders are later closed. As the local policeman puts it to one hapless refugee, “You should never have travelled abroad without your passport, madam”.

You’d think this farce had more relevance in Cold War Europe than Britain in 2014 but a court decision against Sandwell Council last week suggests otherwise. In this case, the local authority had required its residents live in the borough for two years before being entitled to council tax reduction.

Sandwell’s reason for the rule was clear: to protect itself from “benefit tourists”. Interestingly, the council wasn’t referring to non-citizens here but instead, to anyone from out of the borough moving into the area as a result of changes to benefit entitlement. The message to these “visitors” was clear: don’t come to Sandwell without your passport.

The judge in the case was unequivocal in his condemnation of the policy, describing Sandwell as “plunging into unlawfulness”. But this is just one example of the rise of the mini-state resulting from the localisation of parts of the social security system which is creating unfairness all around.

A recent report on the localisation of council tax reduction schemes in London, for example, has shown that hardship depends very much on your postcode. Z2K, the authors of the report, met “Maria”, a woman caring for her disabled son full-time and struggling to stretch her benefits to pay £6 each week in council tax. She lives in Harrow, where charges are among the highest in London. In contrast, her sister who lives a few stops down the Bakerloo Line in Westminster doesn’t pay any council tax at all.

The report also showed that there are huge variations in how councils enforce council tax collection from their poorest residents. How likely you are to be charged for falling into arrears, how much you will be charged, and whether you are likely to have a bailiff knocking on your door all vary dramatically between boroughs. Perhaps most shockingly, the report shows that in 2013/14, over £10m was charged to London’s poorest residents in court charges when they fell behind on payments.

Council tax benefit isn’t the only part of the social security system that has been localised, however. In April 2013, local authorities were also handed control of parts of the social fund, and have since had the unenviable task of providing support to vulnerable people while at the same time the funds for such schemes have been cut.

It’s no surprise, then, that councils have had to put in place various rationing arrangements. The evidence shows that some have simply drawn the criteria for local welfare support so tightly their schemes have effectively withered and died. But others have taken the Sandwell approach, introducing a residency rule on which access to local welfare assistance is conditioned. As a result, in some parts of the country, a woman fleeing across boroughs to escape a violent partner is ineligible for support to set up a home for her and her children.

How much you notice the rise of the mini-state depends disturbingly on how much you earn. If you are in secure employment, getting a decent wage, you might not notice these changes – unless of course you lost your job or got sick. For those on a lower income or not working, however, some boroughs are considerably more welcoming than others. Passport to Pimlico may be hugely entertaining, but the destitution that many are experiencing as a result of the real-life shenanigans of localisation is anything but.

Megan Jarvie is London campaigns coordinator for the Child Poverty Action Group and Lindsay Judge is senior policy and research officer for the Child Poverty Action Group.